Delta Air Lines, battling with its pilots' union over its effort to cut labor costs, said Monday that it might have to seek bankruptcy protection unless it can obtain contract concessions.
The disclosure, which sent Delta's stock tumbling, came three days after a similar warning by US Airways.
Delta's disclosure, made in a filing with the Securities and Exchange Commission, was its first acknowledgment that it might face a Chapter 11 filing.
Last month, the airline's chief executive, Gerald Grinstein, insisted that Delta could get through a lingering financial crisis without seeking bankruptcy protection.
But in the SEC filing, Delta said it "will need to pursue alternative courses of action intended to make us viable for the long term" unless it can make its costs competitive, start earning sustained profits again and get access to capital markets.
Those alternatives include "the possibility of seeking to restructure our costs under Chapter 11 restructuring," the airline said.
Shares of Delta fell US$0.84, to US$4.54, down about 16 percent.
Industry analysts have been concerned for months about the prospects for Delta, which is based in Atlanta. The airline, the nation's third largest behind American Airlines and United Airlines, lost US$383 million in the first quarter, about US$33 million more than it had forecast, in large part because of skyrocketing jet fuel costs, which are up more than 40 percent over the last year.
Delta's two biggest rivals, American and United, have each won significant reductions in labor costs from their unions.
Before those cuts, Delta's overall costs were the lowest among the traditional major airlines; now, the airline said, they are among the highest, and roughly double those of low-fare airlines like Southwest Airlines or JetBlue. The situation "places us at a serious competitive disadvantage," Delta said in the filing.
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